The Yankee-StubHub Breakup Is Going To Have A Lasting Impact On The Ticket Market

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Like any 15-year relationship, the Yankees-StubHub break-up has not been pretty. Ken Belson at the New York Times has provided the most detailed coverage of the dispute, and so far it's been like watching the press conference leading up to a heavyweight bout. It's also a dispute that is likely to have a lasting impact on the ticket market, as we know it.

The ticket market is complicated business. There are layers upon layers--both formal and off the record--of selling agreements that often make it hard for the average consumer to understand where their ticket actually came from. There was once a simpler era, when to buy a ticket, you simply walked up to the box office, or called Ticketmaster's regional phone number in hopes of getting your ticket. If you're old enough to remember the original Yankee Stadium ticket booths, you likely remember the finality of the onsale for big events. Either you got the tickets or you didn't. If you didn't, it meant hoofing up the stadium day-of and hoping you could find a ticket from someone outside the stadium, (most of whom were well within the 1,500 foot radius).

In 2013, the box office never closes and an event is never sold out. In 2013, your ticket purchase could be putting money into four different pockets, all before you even take your seat. It starts, of course, with the Team and Ticketmaster. From there, brokers and fans buy tickets and list them for resale on sites like StubHub. If you then add aggregators, like TiqIQ to the mix, that's a fifth pocket.

With the launch of their Ticket Exchange, the Yankees may be laying out a model that simplifies the supply chain and has a meaningful impact on where fans buy tickets and how much they pay for tickets.

The Yankees have always used size to get and stay ahead of the market. They were one of the first teams to launch their own cable network in YES--most recently valued at $3 billion, or roughly $1 billion more than the Yankees themselves. Not surprisingly, other teams have followed. In addition to the financial benefit of YES, it has also created media network 100% aligned with the team's storied brand (In 2008, the Yankees also co-founded Legends Hospitality along with the Dallas Cowboys to manage food concession at both New Yankee and Cowboy Stadium). As was the case with YES, the Yankees Ticket Exchange, as it's called, is a chance to build an Commerce platform that leaves behind Stubhub's one-size-fits-all approach in favor a model that is unique not only to the teams brand, but also to the unique demand for Yankees Tickets. The 2012 launch of NBAtickets.com—a partnership between Ticketmaster and the NBA—is further evidence of the trend toward team and league-centric buying environments.

For buyers and sellers of Yankees Tickets, the change will be immediately apparent, as season ticket holders will only pay 5% on sales as opposed to StubHub's 15%. These fees get passed onto the buyers; so lower seller fees should translate to lower ticket prices.While StubHub may one day match the Yankees 5%, the battle of lower fees is not one they'll ever win. Over time the 10% of margin that the Yankees are cutting out of the transaction will be more than compensated for by all the other things that can sell or market to buyers (see Legends and YES above).

Whether through business decisions or market forces, over the last 30 years, key functions like concessions and tickets, once run by the team, have been outsourced. What the Yankees are doing with their ticket exchange--and Legends--is a classic case of vertical integration. Over the last 10 years, Apple has become the poster child for the product benefits of vertical integration. While on-the-field performance is at the core of any teams 'product', product is also very much about what happens between the game, and ticket prices are a big part of that. Today, fans get ticket info from many sources, including vertically-integrated Apple iPads and iPhones as well as Android devices, email, websites, browsers, landlines and, yes, even the box office. Most fans would agree that the proliferation of channels and parties involved in a ticket purchase has gotten far too complex.

As a Yankees' fan, I'm looking forward to seeing how the buying experience evolves now that the team has taken a more active role in the process. As a participant in the ticket industry, we think it may be the beginning of a new and simpler era.